Taxes and Nexus States

What Is Sales Tax Nexus?

Nexus is the legal term for a connection between your business and a state (or province) that requires you to collect and remit sales tax on transactions within that jurisdiction. If you have nexus in a state, you are legally obligated to collect sales tax from customers in that state.

What Creates Nexus?

Nexus can be established by:

• Physical presence — A storefront, warehouse, office, or employees operating in the state
• Economic nexus — Exceeding a state's sales threshold (typically $100,000 in sales or 200 transactions per year, though thresholds vary by state)
• Affiliate nexus — Having affiliates, representatives, or contractors in the state
• Inventory storage — Storing inventory in a state (including third-party fulfillment centers or marketplace warehouses like Amazon FBA)

Important: Since the 2018 Supreme Court decision in South Dakota v. Wayfair, most states have enacted economic nexus laws. This means even if you have no physical presence in a state, exceeding their sales threshold creates a tax obligation. You should consult with a tax professional to determine where your business has nexus.

Configuring Taxes in PSS

Origin Address

Your origin address tells the tax calculation system where your business is located. This is required for accurate tax rates.

Tip: Fill in all origin address fields, not just the zip code. Some tax jurisdictions have different rates at the city or street level. A complete address ensures the most accurate tax calculation.

Setting Nexus States

The Nexus States field is a multi-select list of all US states and Canadian provinces. Select every state or province where your business has nexus.

When you save your settings, the system registers your nexus with the tax calculation service. Tax will only be collected on orders shipped to states you have selected.

When to Add a Nexus State

Add a state to your nexus list when:

• You have a physical location there — storefront, warehouse, office, or employees
• You've exceeded the state's economic nexus threshold — typically $100,000 in sales or 200 transactions in that state within the current or prior calendar year
• You store inventory there — including third-party warehouses or fulfillment centers
• You have affiliates or contractors soliciting sales in that state

When NOT to Add a Nexus State

Do not add a state to your nexus list if:

• You have no physical presence AND have not met the economic nexus threshold — You are not required to collect tax in states where you have no nexus
• You are unsure — Adding a state incorrectly means you'll collect tax you may not need to remit, which creates its own compliance issues. Consult a tax professional first.
• The state has no sales tax — Alaska (local taxes may still apply), Delaware, Montana, New Hampshire, and Oregon have no state-level sales tax

Ongoing Nexus Monitoring

Nexus is not a one-time setup. As your business grows, you may cross economic nexus thresholds in new states. Review your sales by state periodically (at least quarterly) to determine if you've triggered new nexus obligations.

How Tax Calculation Works

Webstore — United States

For US-based dealers, PSS uses TaxJar to calculate sales tax in real time at checkout.

When a customer enters their shipping address:

1. PSS sends the customer's shipping address, your origin address, and your nexus states to TaxJar
2. TaxJar determines the applicable tax rate based on the destination state, county, and city
3. The calculated tax amount is displayed to the customer before they complete the order
4. The tax amount is recorded on the order

Tax is only collected on orders shipping to your nexus states. If a customer orders from a state not in your nexus list, no tax is charged.

Webstore — Canada

For Canadian dealers, PSS uses Avalara AvaTax to calculate GST/HST/PST.

When you save your settings with Canadian provinces selected as nexus, PSS automatically provisions your tax profile with Avalara. Tax calculation then works the same way — real-time calculation at checkout based on the customer's shipping address and your nexus provinces.

Marketplace Channels

Tax handling differs by marketplace:

eBay Tax Settings

eBay has its own tax configuration separate from the webstore:

Note: eBay now acts as a marketplace facilitator in most US states, meaning eBay collects and remits sales tax on your behalf regardless of your PSS tax settings. The eBay tax settings in PSS primarily apply to states where eBay does not act as facilitator. Check eBay's current marketplace facilitator state list for the most up-to-date information.

Tax-Exempt Products

Some products may be exempt from sales tax (e.g., certain types of safety equipment, food items, or other state-specific exemptions). PSS supports marking individual webstore products as tax-exempt.

When a product is marked as tax-exempt:

• Its price is excluded from the taxable subtotal sent to the tax calculation service
• The proportional share of shipping cost for that item is also excluded from the taxable shipping amount
• The customer sees a lower tax amount at checkout

Tax exemptions are set at the product level — there is no customer-level tax exemption in PSS.

What PSS Does and Does Not Do

PSS Does:

• Calculate tax at webstore checkout using TaxJar (US) or Avalara (Canada)
• Collect tax from customers on webstore orders
• Record tax on all orders (webstore and marketplace) for your records
• Respect your nexus configuration — only charging tax in states you've designated

PSS Does Not:

• File or remit tax returns — You are responsible for filing sales tax returns and remitting collected tax to each state. Consider using a tax filing service (TaxJar, Avalara, or your accountant).
• Track your economic nexus thresholds — You need to monitor your sales volume by state to know when you've triggered nexus in a new state.
• Provide tax advice — Consult a tax professional for guidance on where you have nexus and what your obligations are.

Best Practices

1. Start with your home state. At minimum, you almost certainly have nexus in the state where your business is physically located. Add this as your first nexus state.
2. Consult a tax professional. Tax nexus rules are complex and vary by state. A CPA or tax service familiar with e-commerce can help you determine where you have nexus and set up compliance.
3. Review nexus quarterly. As your online sales grow, you may cross economic nexus thresholds in new states. Check your sales by state at least every quarter.
4. Fill in your complete origin address. Tax rates can vary at the city and even street level. A complete origin address ensures the most accurate tax calculation for your customers.
5. Don't forget marketplace sales. Sales through Amazon, eBay, and Walmart count toward economic nexus thresholds in each state — even though those marketplaces collect and remit the tax. Your total sales volume across all channels determines your nexus obligations.
6. Keep records. PSS records the tax amount on every order. Use these records when filing your sales tax returns.
7. Understand marketplace facilitator laws. Amazon and Walmart collect and remit tax on your behalf in states where they are the marketplace facilitator. You generally do not need to remit tax separately for those sales, but you may still need to file returns showing those transactions. Check your state's requirements.